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New Car Insurance Grace Period [Guide]

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UPDATED: Jun 23, 2020

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Car Insurance Grace Period Overview
Car Insurance Grace Period SummaryCar Insurance Grace Period DetailsFrom the Experts...
Impacts on Car Insurance RatesDriving record, location, age, gender, credit score, use, insurance typeInsurance Information Institute
New Car Insurance Grace PeriodUp to 30 daysVarious Insurance Companies
New Car InsuranceReplacement Car – Old insurance will convey to new car.
New Car – New insurance is required.
CNN Money
Liability Car Insurance Average Annual Rate$207 (includes bodily injury, property damage, uninsured motorist)Quadrant Data
Comprehensive Car Insurance Average Annual Rate$148Quadrant Data
Collision Car Insurance Average Annual Rate$322Quadrant Data
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Are you thinking about buying a new car? If so, you’re probably wondering about insuring your new car and if there is a new car insurance grace period after buying a car. Are you replacing your car? Are you adding a new car? There are a few things to consider with your insurance when buying a new car. We will cover all of the bases here to make sure that you have the information you need when you buy that new vehicle.

To start, you can use our free tool at the top of the page to get a quote for your new car.

How soon do you need to get insurance coverage for your new car?

Insurance companies may offer an insurance grace period for new cars, but this can vary from state to state. There are a few things to consider when purchasing an insurance policy for your new ride before you drive it off the lot.

First, are you paying cash or financing the vehicle through a lender, such as a bank, credit union, or perhaps a leasing company? Second, do you already have an auto insurance policy? If you already have a policy the process can be pretty simple, but there are important factors to consider regarding insurance coverage for a new car.

Is there a grace period for new car insurance?

If you have a current and active insurance policy, you will probably be allowed a period of time to add the new car to your policy. Most car insurance companies cover your new vehicle during this period in good faith. If you purchase a car from a dealership, the dealer will confirm your insurance status before you leave with your car. This will be true if you are buying or leasing the vehicle.

If you do not have an active insurance policy, you will have to buy a policy before getting behind the wheel. The video below gives you a brief overview of how to get insurance for your new car.

As mentioned earlier, there are several options, so it is important to know what coverage you need. Purchasing a policy is fairly easy and can even be done while you are at the dealership.

Do you have 30 days to get insurance on a new car?

According to various insurance companies, the auto insurance grace period usually lasts up to 30 days. While some companies may give you up to 30 days, others offer as little as four-day grace periods. There is no standard grace period, and some companies simply provide this as a courtesy to their customers. The time limit will vary by company.

How long does Geico give you to add a new car? When buying a new car, the insurance grace period from Geico is 30 days. Progressive Insurance also offers a grace period of 30 days when you buy a new car. As you can see, other major companies all offer a one-month new car grace period as well.

  • Allstate new car insurance grace period: 30 days
  • Farmers insurance new car insurance grace period: 30 days
  • Geico insurance new car insurance grace period: 30 days
  • Liberty Mutual new car insurance grace period: 30 days
  • Nationwide new car insurance grace period: 30 days
  • Progressive new car insurance grace period: 30 days
  • USAA new car insurance grace period: 30 days

Some insurance companies, on the other hand, offer smaller grace periods.

No matter how long your insurance company allows for a grace period, you should make it a priority after buying a car to utilize the new car insurance grace period whether it’s for Geico, State Farm, or a local provider.

Understanding Insurance Coverage Requirements for Financing or Leasing Your Car

The insurance scenario will play out depending on your financing. Are you paying for the car outright or are you financing or leasing a car from an institution?

Car Insurance Requirements by Financing Method
Car Buying Financing MethodsCar Insurance Requirements
Lender Financing (bank, finance company, etc.)Bodily injury liability, property damage liability, comprehensive
collision, uninsured/underinsured motorist coverage (if mandated by the state),
any additional state-specific requirements (such as PIP)
Self-Financing State required minimum liability coverage ( usually bodily injury and property damage)
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Typically, if you are using your own money to purchase a new vehicle you will only be required to carry some form of liability insurance by your state. You may choose to add more coverage if you wish.

If you are securing financing or leasing the vehicle from a financial institution you will probably be required to get additional coverage. The financer is likely to require you to add collision and comprehensive to help ensure the lender’s risk is sufficiently covered.

Read the Fine Print for Your New or Used Car Loan or Lease

According to U.S. News & World Report there are several things you should do when buying a new car such as researching the car and speaking with your insurance agent. It is important to understand, also, what is required of you when you decide to go buy your new car. There will be different requirements based on your financial institution. Some will require more insurance and some will require less.

The video below will help you understand the financial differences between buying and leasing a car.

Banks, finance companies, and others may ask for additional coverages on top of the standard policy that you have. Make sure that you are informed about all of the constraints placed on your insurance coverages. How long is a new car covered on insurance? It depends.

Financial institutions may require a “forced place” clause. This allows the leasing company to arrange for insurance and bill you if you don’t provide proof of insurance within a specified window. You may also be required to purchase gap coverage if you’re financing or leasing your car. This will help cover the difference between what you owe on your vehicle and what your vehicle is worth in the event of an accident.

When it comes down to it, make sure that you are very clear on what is required of you from your lender. The Federal Trad Commission has information on how financing or leasing your car will impact your wallet. They will also be very specific about your insurance coverage. You will need to consider your options depending on your situation.

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Replacing or Adding a Vehicle

Are you simply replacing your current vehicle with a new one (including leased vehicles) or are you adding an additional vehicle? Whatever option you are choosing, will determine your insurance needs for your new vehicle.

Replacing Your Old Car

If you decide to replace your car with a new or used car you should be able to transfer your old insurance to your new car. The types of coverage and their limits for your new vehicle will match what’s listed on your policy for your old vehicle until you update your policy to include any additional coverages you need for your new vehicle. That means that if you only carry liability for your old vehicle, you will not have collision coverage or comprehensive coverage for the new one until you add those.

If you’re simply replacing an older car with a new replacement vehicle, most insurance companies offer automatic coverage for a certain amount of time, perhaps a week or two, and the coverage should be the same as what you had on the old car.

While new car insurance grace periods may differ by state or insurer, you could have up to 30 days to notify the insurer of the change. The insurer acts on the assumption that you didn’t trade in a Yugo for a Lamborghini, so they’re comfortable giving you some time to notify them about it. Of course, it’s better to notify them sooner rather than later to avoid any potential issues.

Adding an Additional Vehicle

Every state except New Hampshire requires drivers to have liability coverage, according to the Insurance Information Institute. Typically, you will have to show proof of this insurance on the new car before you can drive it off of the lot.

Since your new car is an additional vehicle to what is already listed on your insurance policy, you are usually not automatically covered.

Although your insurance company may extend automatic coverage, you will need to contact them to be sure. Of course, your insurance company will want to know about the additional vehicle because it means they’ll have more exposure to potentially paying insurance claims and will most likely increase your insurance premiums.

Things to Consider About Car Insurance Grace Periods

After purchasing the new car and your road, now what? As discussed earlier, you probably have a few days to add your new car to your insurance policy. Though you should add your new car as soon as possible, you might choose to use some of your insurance company’s grace period.

You might want to consider where resources from your state to get answers about your potential grace period. For example, how long do you have to add a new car to your insurance policy in Pennsylvania? Most states will leave this up to individual companies to decide. However, it is worth checking with your state to see if there are specific rules.

If you are utilizing your insurance grace period, there are a few things to consider while driving your car.

A Car Accident During the Insurance Grace Period

As soon as you drive off of the dealership lot, you are responsible for your car no matter if you have officially added your car to your insurance policy or not. So what happens if you get into an accident during your grace period?

The first thing to know is that as long as the accident happens within your insurance company’s grace period, you should be covered.

Your coverage limits will be the same as they were on your previous vehicle. Just as with any accident, if you are at fault, your insurance premiums could go up as a result of your accident.

Car Insurance Grace Period When Buying From a Private Seller

Whether buying a car from a dealership or a private seller, the rules will be the same: Every driver on the road is required to have insurance. If your insurance company allows a grace period, coverage will extend to your vehicle from the time you drive it home until the time period expires. There is not a particular process that varies when buying from a dealer or a private seller.

Unlike a dealership, however, a private seller will likely not require proof of insurance before allowing you to drive off. If you don’t currently have a policy, the law requires you to purchase coverage as soon as you decide to drive the vehicle. Since it doesn’t take long to get insured, compare your options, and get covered quickly.

A Lapse in Car Insurance Coverage During the Grace Period

If you can help it, it is very important that you do not allow your auto insurance coverage to lapse. You’ll need to know if you can drive a car without insurance if you just bought it, and there could be consequences if you do. The most concerning issue is that you will not be covered if you were to get into an accident. This would leave you personally responsible for damages and could result in legal consequences as well.

Once you reinstate your insurance coverage, you might have to pay higher rates as you would be considered a high-risk insurance client.

Lapses in insurance coverage are considered by insurance companies when determining rates. It is important to maintain coverage. Begin searching for insurance quotes as soon as possible.

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What kind of car insurance will you need for your new car?

One of the first things that you need to consider, is what kind of insurance you will need for your new car. After your grace period ends, according to the III, you will need to have appropriate coverage for your new car. AAA notes that, depending on where you live and how you are financing the vehicle, you will be required to have more or less insurance. Understanding the types of insurance you may need will help you get on the road quicker.

The video below explains how much car insurance you may need. Take a look to get a better idea before you buy your new car.

In most states, liability coverage is the minimum that you must carry to legally drive your new car. Most auto liability insurance policies contain three major parts: liability insurance for bodily injury, liability insurance for property damage, and uninsured/underinsured motorist coverage.

  • Bodily injury liability coverage does not protect you or your car directly. This insurance protects you in an at-fault against a second party’s claims for damages, such as medical expenses, lost wages, and pain and suffering.
  • Property damage liability coverage pays for any damage you cause to the property of others. This will cover costs such as damage to another vehicle, fence, or tree caused by a collision.
  • Uninsured motorist and underinsured motorist coverage protect you directly. This coverage pays if you are involved in an accident with a hit and run driver, a driver who does not have auto insurance or a driver who does not carry enough insurance.

Comprehensive coverage is usually additional coverage. This is a catch-all insurance plan that protects your vehicle against damage caused by anything other than a collision. It also protects you from having to pay for it. It is even going to provide coverage if your car is broken into or stolen.

Collision insurance is also usually additional coverage that you will need to protect your car against physical damage. Collision coverage will pay for damages when your car collides with another one, regardless of fault.

Average Annual Car Insurance Rates by Coverage Type
Car Insurance
Coverage Types
Car Insurance
Coverage Details
Average Annual
Car Insurance Rates
Uninsured/Underinsured MotoristCovers the costs if you are in an accident
with driver with little or no insurance
$67
Property Damage LiabilityPart of standard liability insurance the pays for
damage to property caused by you
$68
Bodily Insurance LiabilityPart of standard liability coverage that pays for
medical bills if you've injured someone in an accident
$72
Personal Injury ProtectionCovers bills such as medical expenses,
funeral expenses or recover lost wages
$95
Med PayCovers the cost of the medical payments
of all passengers in your vehicle
$100
Comprehensive Covers damage to your car from incidents
other than a wreck
$148
Collision Covers damage to your car after an accident
no matter the fault.
$322
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Aside from liability, collision, and comprehensive insurance, other coverage options are also available to offer you added protection. Adding these policies will increase your premium payment but will also maximize your coverage.

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Additional Car Insurance Coverage Options

If you are looking to bolster your insurance coverage and increase your protection, insurance companies offer several options. To ensure that you are fully covered after an accident, you can opt for gap coverage. This policy will cover the difference between what you might still owe on the car and the amount you will receive from your insurance company if the car is totaled.

Many insurance companies offer Personal Injury Protection (PIP) to help with your medical expenses. You may also look at Medical Payments to Others, or Med Pay, which will cover the cost of the medical payments of all passengers in your vehicle should they sustain any injuries.

Additional Car Insurance Coverage
Car Insurance
Coverage Types
What is Covered
Gap Insurance Covers the difference between the value of a car at the time it's totaled or stolen and the balance of the loan or lease.
Personal Injury Protection InsuranceCovers medical expenses regardless of fault, and often includes lost wages.
Medical Payments to Others (Med Pay) InsuranceCovers the medical payments of all passengers in your vehicle if they are injured in an accident regardless of fault.
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After deciding which insurance is best for you, you will need to consider the cost to determine the overall expense of owning your new car.

How much is insurance for a new car?

When you purchase your new car, insurance coverages can vary so you must familiarize yourself with the grace period and the type of protection that will transfer, based on your situation. Each state has different regulations. Florida’s new car insurance grace period ranges from seven to 31 days depending on the type of the policy. By contrast, the new car insurance grace period in Arizona is seven days, and there is no new car insurance grace period Washington state for standard liability insurance.

Factors that Impact Car Insurance Rates
Car Insurance
Rate Factors
Why It Matters
AgeYour driving experience will determine how much of a risk you are to the insurance company.
CarThe cost of the car you drive is a reflection of the cost to replace it.
Credit ScoreYour credit based insurance score predicts the likelihood of your filing a claim and the likely cost of that claim.
Driving RecordYour driving record is a reflection of how safe you are as a driver.
GenderWomen often pay less than men as statistics show female drivers to be safer and more cautious.
Insurance Type and AmountHow much insurance you want and your plan limits and deductibles impact how much you pay.
LocationThe location of the car will determine the risk from things like vandalism, theft and accidents.
UseThe more miles you drive, the more chance for accidents so you'll pay more.
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The details in the above table demonstrate common factors that impact insurance rates. Each insurance company has different parameters and can include other factors. Whatever your situation, it is always good to compare car insurance quotes. By doing so, you can take a closer look at various coverage options. You will also be able to comparison shop from different companies to choose the one that fits your needs and your budget. Things such as MSRP, your driving history, and your location will all play into the rate you will pay for your insurance policy.

Insurance premiums will vary depending on a number of factors. The one thing that is certain is that you will have to cover your new car, and you will want to do your homework to get the best rates possible.

Getting a new car can be exciting. However, don’t overlook some of the important details such as securing appropriate insurance coverage. It is best to get coverage as soon as possible. Remember that a car dealership will not get in touch with your insurance company for you.

If you do not know whether your insurance company offers a grace period, contact your agent or company before you purchase the car. Doing this will ensure that you are properly covered and can enjoy your new ride with no worries.

References:

  1. https://cars.usnews.com/cars-trucks/dos-and-donts-of-car-buying
  2. https://www.consumer.ftc.gov/articles/0056-financing-or-leasing-car
  3. https://www.iii.org/article/background-on-compulsory-auto-uninsured-motorists
  4. https://drivinglaws.aaa.com/tag/liability-laws/
  5. https://www.kbb.com/new-cars/total-cost-of-ownership/

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